3D Printers – Niche Product or Mainstream Must Have?

Ethical discussions involving 3D printers seem to be top of mind for reporters these days as various media outlets report on the printing of guns and even bones by technology that was previously inaccessible to the consumer. What started out as an industrial prototyping and design tool, the 3D printer has started making its way into the home user market. Accidentally break a mug in the dishwasher? Just print another one!

Though you might not have realized it, these devices have actually been around for a couple of decades, so why are we only hearing about them now? The answer is, price. Like many gadgets and gizmos, 3D printers were incredibly expensive when they were first invented. Like computers in the 70’s or 80’s, not many people would are willing to spend $10,000 or more on a niche product. Only in the last few years has the price of 3D printers dropped enough to make them attainable by the general public. A quick Google search for 3D printers yields products that range in price from £875 to £3,100.

This technology has a definite cool factor when you think about all the ways it could be used, this leads me to think: is there an investment opportunity here?

Companies

There are two big publicly traded companies in this market, Stratasys (SSYS) and 3D Systems Corporation (DDD). In one year, the shares of these companies have gained 725% and 103% respectively. That’s not a bad return! This stratospheric rise makes you wonder, how sustainable is this growth? Is everyone going to go out and start buying 3D printers at their local Office Depot, Walmart or Best Buy?

Investors love new innovative products or sectors and they buy into them, heavily. 3D Systems has a PE ratio of 120 and a Beta of 1.8 while Stratasys sports a PE of 168 and a Beta of 1.3. Both these companies are priced for growth and volatility. High growth with high volatility means one thing, risk. One or two pieces of bad news and these stocks could come crashing back down to earth.

I think there’s a lot of hype on this topic these days and the market might be getting disconnected from reality. I simply have not seen a 3D printer in anyone’s home, nor have I heard of anyone talking about buying one. With prices as high as I mentioned above, most people would rather spend their hard earned money on something else. Hopefully paying down debt, right?

The Future

If these printers can be made even more affordable then their footprint could skyrocket. The whole industry would also need to become more consumer oriented and mature. With standard printers we started with the venerable dot-matrix and moved on to laser, inkjet and color laser printer. Features were added along the way including multifunction (print, copy, scan, fax) capabilities and wifi connectivity. It seems like we are still in the dot-matrix days of 3D printing at the moment.

What might these features be for 3D printers? For one, different materials could be used. From what I gather so far, only plastics can be used as material for printing because it can be heated and molded with relative ease. Imagine if you could make some adjustments to the printer, change heads and then be able to print objects in rubber, metal, stone, etc. Then the number of uses would really start to multiply.

Like PCs and printers of yesteryear, size is also an issue. 3D printers have been getting smaller and smaller, if they are going to make it into mainstream use, they need to get smaller still, and easier, to use.

As with any new technology, it takes time for adoption to ramp up. As long as people can find new and interesting ways to use 3D printers and prices come down, the product will become more compelling. On the investing topic, there are companies out there that you can buy a piece of which will let you take part in the 3D printing phenomenon. Just keep in mind that these companies are highly volatile and very risky.

5 Comments

I don’t think the price drop will affect most consumers for a while. But where this tech can make a big dent is on the corporate side. It’s now cheaper and quicker for companies to create prototypes to physically test and handle. And for those budding investors out there this is huge as well. 3D printing could potentially have an exponential effect on the economy.

Time will tell what the true effect of 3D printers are but I think it’s promising.

I realize this is a long way off and that I will probably never see it, but I am looking forward to medical uses for 3D printing, such as organs etc for transplant. The replicator from Star Trek really lives!

I agree with both Glen and Sierra. We will see these widely used, mainly for fast prototyping or low volume custom printing, and there will be new jobs created and new small businesses started. On the other hand, I’ve seen wild speculation on saving manufacturing and I think this is overblown. As far as investing, I wouldn’t touch it unless you like speculation. It’s very competitive – just like the 2D printer business. I don’t expect shrinking in size – they make real things so there’s only so much shrinking. In fact, there’s a need for bigger machines and faster throughput.

Just like Sierra said, this is just another piece of technology that came from Star Trek, just like laptops, tablets, cell phones, and Blue Tooth. If enough people are really concerned about it, perhaps they’ll put restrictions on it on creating things that consumers have not had access to before – just like it’s against the law to text or talk when you drive. But being against technology is just being against advancement and growth, and who wants that?